Special needs trusts for injury settlements can be a life saver for your clients. Recipients of need based government benefits require special consideration when receiving settlements in personal injury cases. A sudden influx of cash will leave a Medicaid/SSI recipient ineligible for benefits, resulting in a quick evaporation of their settlement funds as medical treatments and services previously paid by the state are now paid directly from the client’s pocket. However, a Special Needs Trust (AKA Supplemental Needs Trust) can be a Medicaid beneficiary’s best friend, avoiding the scenario described above. Funds placed into a Special Needs Trust are not countable assets for government benefit eligibility. Thus, a client may place their settlement funds into a Special Needs Trust, and maintain government benefits. Trust funds may be used for extra services and luxuries not provided for by Mediciad and SSI. Trust funds may NOT be used for food, shelter, property taxes, fuel, or utilities.
Special Needs Trusts for Injury Settlements – Eligibility
For an individual to be eligible for a special needs trust in Florida, they must be under 65 years old and disabled as defined in as defined in section 1614(a)(3) of the Social Security Act. For clients over the age of 65, a Pooled Trust under 42 USC 1396p(d)(4)(c) is appropriate. Here, we will address trusts for individuals under 65 funded through a personal injury settlement. In considering whether a client is disabled, the Social Security Act informs us that disabled means “unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months.” Fortunately, this determination has already been made is most cases. Any client receiving SSI benefits in Florida has been determined as disabled under this definition.